Real News‎ > ‎2015‎ > ‎February 2015‎ > ‎

3rd February 2015

Singapore Economy


EDB sees investments slowing further in the years ahead

Source: Straits Times / Top of The News

A TELECOMMUNICATIONS network solely for public-sector use is being planned to drive Singapore's smart nation agenda.

This is a departure from the norm as the Government typically leases connectivity rather than own such networks.

The new infrastructure will run the equipment for linking, among other things, a network of sensors slated to be rolled out islandwide this year.

The sensors - which can be in the form of computer chips or surveillance cameras - are for increasing round-the-clock surveillance in Little India and the Civic District in the heart of Singapore, for starters.

Other projects include monitoring the risk of flooding via sensors in drains and the safety of the elderly via sensors installed in their homes.

The telco that will operate the infrastructure on behalf of the Government will be identified and certified by the Infocomm Development Authority (IDA), which is looking for contractors to design and build this backend framework. This Internet Protocol (IP) backbone will also carry signals from mobile base stations, according to tender documents seen by The Straits Times.

Traditionally, such an IP backbone - which provides links as fast as 10Gbps, or 100 times the speed of most home broadband packages - is owned by telcos.

"As Singapore becomes a smart nation, we see new areas and opportunities for the Government to do more to assist, grow and build up a common infrastructure to support the deployment of smart nation applications," said an IDA spokesman.

"It is critical for the Government to own key components of the IP core to ensure that such a platform is secure and trusted to safeguard potential sensitive information used across multiple government agencies."

At least one telco has voiced concern over potential loss of business. "It will no longer be business as usual. The competitive landscape will change significantly, and this change is initiated by... the regulator itself," said Mr Benjamin Tan, managing director of SuperInternet, which sells high-speed connectivity to government agencies. Singtel and StarHub declined to comment. The IDA spokesman said there will be no conflict of interest.

Mr Mike Ang, president of the Association of Telecommunications Industry of Singapore, said: "Some existing telcos' business may be reduced presumably for security reasons. The question is, At what point does security justify the cost of such a set-up?"

The tender for the IP backbone closes on Feb 10.

-By Irene Tham, Technology Correspondent


Investments down as S'pore chases quality

It is looking to attract projects in line with its tighter manpower policies

Source: Straits Times / Top of The News

HE big-ticket foreign investments that keep Singapore's economy humming continue to fall.

The trend took hold since Singapore tightened its manpower policies and lost its attraction for companies that depend on cheap foreign labour. This year, the uncertain global outlook could dampen investments further.

In its latest forecast, the Economic Development Board (EDB) said it expects to attract $9 billion to $11 billion worth of fixed asset investments this year, which will create 13,000 to 14,000 skilled jobs.

This year's targets are down from $11.8 billion worth of inbound investments last year, which are expected to eventually yield some 16,100 skilled jobs.

But the slowdown started before that. Singapore attracted $12.1 billion worth of investments in 2013 while, in 2012, when labour policies had just started to tighten, it raked in investments to the tune of $16 billion.

This moderating trend reflects a "sharper focus on attracting projects that are in line with Singapore's stage of economic development, manpower policies and planned international commitments on carbon emissions", the EDB said.

Apart from chasing new, high-quality investments, the EDB will work closely with companies that already have operations here, including those that are looking to restructure or relocate. This would include handling the associated layoffs in a "planned manner", said EDB chairman Beh Swan Gin.

"In so doing, we can work with unions so that workers who may be affected can be retrained," said Dr Beh.

Even if companies shrink their footprint, the key is for their remaining operations here to be more productive, he said.

Singapore International Chamber of Commerce chief executive Victor Mills said Singapore remains an attractive investment destination and is being sensible in weaning itself off cheap foreign labour. But he asked for more flexibility.

"There needs to be recognition that the local workforce doesn't want to do certain jobs," said Mr Mills. "The manpower policy needs to have a different approach for different sectors (and ease up on sectors which find it tougher to hire Singaporeans)."

Said DBS economist Irvin Seah: "The EDB is being more selective with the types of foreign investment it brings in, given the tight labour market here.

"Singapore is no longer aiming for high growth but sustainable and quality growth. The type of foreign investments the EDB brings in should reflect that."

Meanwhile, last year's investment reflected the changing landscape, with the chemicals sector accounting for the largest chunk - about $2.6 billion, or 22 per cent of the total. The share from electronics was 13.6 per cent last year, down sharply from 26.9 per cent in 2013.

The EDB said Singapore remains plugged into major growth trends in the electronics industry, such as cloud computing.

-By Chia Yan Min

EDB now wearing more hats

Attracting investments aside, it'll transform firms to be more competitive and create new businesses 

Source: Business Times / Government & Economy

The Singapore Economic Development Board (EDB) will be doing more of what its name says, in addition to what it has been doing mostly all this while. Apart from selling Singapore as a hot spot for investments - which has appeared to be EDB's main job so far - the Board would stress more on helping companies here to become more competitive, its chairman Beh Swan Gin said at a press conference on Monday. He said EDB would also work with key players here to create new businesses to generate economic growth and jobs.

-By Chuang Peck Ming        

Singapore Real Estate


URA to decentralise business activities and commercial centres outside CBD

In an exclusive interview with Channel NewsAsia, the Urban Redevelopment Authority’s Chief Planner Lim Eng Hwee talks about key strategies for the next decade, and "planning mistakes" in the past.

Source: Channel News Asia / Business

SINGAPORE: In an exclusive interview with Channel NewsAsia, the Urban Redevelopment Authority’s (URA) Chief Planner and Deputy Chief Executive Officer Lim Eng Hwee said URA intends to intensify efforts to decentralise business activities and commercial centres outside the city.

Decentralisation is a way to achieve a more sustainable growth by distributing commercial activities to various parts of the island, such as Tampines, Jurong and Paya Lebar – as well as an upcoming one stretching from Woodlands to Punggol, called the North Coast Innovation Corridor.

Q: What is URA's key strategy for the next decade?

A: Broadly and conceptually, we have always talked about decentralising activities, but we think there is opportunity for us to really intensify, to work across all the agencies to make it happen – and in the process create something that is quite unique.

Take Jurong as an example. Before we launched the development, the masterplan in 2008, people's impression of Jurong is: It is near an industrial area; it is not attractive; there is only one shopping mall. With Jurong East today, once you have coordinated effort across agencies, partnerships with the private sector to try to integrate things together, it can take a very refreshing look.

Tampines Regional Centre has achieved a certain critical mass, it right now has a couple of hundred thousand square metres of office space; it has three significant malls. So in terms of serving the residents' needs it is adequate for now, but Tampines is still being developed. We see the Tampines regional centre and Changi Business Park – which is right next to the new SUTD University – as a twin hub that anchors major business and commercial activities.

The location of these two twin centres, in particular the Business Park, is right next to Changi Airport. In time, the next 10 years or so, Changi Airport will be expanded and there will be a lot more activities happening in Changi. The whole of Singapore’s East will be a very significant hub.

Q: Long-term and forward-looking planning has been entrenched in the land use development process in Singapore. How has this enabled Singapore to be more nimble in seizing opportunities?

A: I would say it is a very strategic advantage to Singapore. We were talking to some of the financial institutions and even sharing, doing exchanges with other cities. You realise that for other cities, when it is time for them to seize opportunities and obtain investments to expand, they were hindered by the availability of land. It is not just land – many cities are much bigger than Singapore, so it is not difficult to find land – but having land in a right location, at a right time that allows you to expand your business investment. To us that gives us an opportunity.

Planning is neverending so these are the type of questions we ask ourselves. Among the agencies we sit down together and brainstorm – whether there are new ideas, whether we can leverage on some of these opportunities.

We know in the longer term, the port will be consolidated in Tuas for example, so there must be a lot of opportunities for us not only to take away the freight traffic now in Keppel, Pasir Panjang, where there's haulage in that area. When you consolidate, you take away that traffic and when you have so many trucks moving around serving the port, surely the logistics industry can find some way to extract maximum efficiency. It can create a logistics hub; it can create things which companies can share the services.

Likewise, the same concept can apply to Changi, when we start to grow aviation not just for passengers, but also the cargo, the aviation industry. Whether it is maintenance, repair and operations or logistics companies, when they start to congregate around the airport, again there will be opportunities for us to do something.

In planning what we can do is discuss with agencies, including economic agencies, to look at what some of these opportunities are, and make sure there is land safeguarded for these new ideas to take place.

Q: Were there any "planning mistakes" and what has been done to rectify them?

A: I am not sure if this is a mistake. Often you make certain decisions in the context of the situation at that point in time. One particular area is perhaps in the area of conservation. For obvious reasons, in the 60s and 70s, we were faced with huge challenges - unemployment, the acute housing shortage, and the city centre was so crowded.

The focus was not on whether heritage buildings should be conserved. So you see a lot of massive, comprehensive redevelopment, where so many old buildings were removed. Looking back in hindsight of course, we say some of these unique buildings ought to be kept.

Starting from the 80s, the planners and the decision makers at that point in time started to think about whether we should start to retain these heritage buildings which are important anchors for future generations. The buildings will provide a link for them to identify with their past. So the conservation journey really started in the 80s.

Having kept these buildings is not enough. Having retained them, I think we should now think about how can we help people to understand more of the history behind these buildings. We have to encourage people to start talking about the buildings, and share their personal stories so that the younger generation, when they look at the building, they understand the history behind them. I would not think that the decision made then to demolish the buildings as mistakes – it is really contextual.

In part two of the interview the URA Chief Planner discusses prospects of building underground and what the URA is doing differentiate Singapore from other cities. 

- CNA/dl

Buyer-occupiers urged to act on falling S'pore prices

Rising mortgage costs to affect servicing ability, but impact is not expected to be significant: Colliers

Source: Business Times / Real Estate


Rising mortgage costs to affect servicing ability, but impact is not expected to be significant: Colliers

WHILE homebuyers are expected to service higher monthly mortgages on the back of rising interest rates, some consultants believe it is still an opportune time to snap up units amid falling home prices.

Colliers International deputy managing director Grace Ng said that homebuyers have to be even more cautious now when assessing affordability before they commit to a property purchase. But with interest rates still expected to be relatively low compared to the levels seen before the 2008 financial crisis, the impact on homebuyers ability to service monthly mortgages "is not expected to be significant".

"Rising mortgage costs will reduce housing demand but the decline is not expected to be significant," Ms Ng said. "Interest rates are expected to remain low given that the US economy has yet to see a full recovery and Europe has just announced a series of stimulus."

And since the total debt servicing ratio framework kicked in, banks have to factor in a higher interest rate of 3.5 per cent when computing buyers' loan eligibility, she noted.

Homeowners were caught by surprise last month when the Singapore interbank offer rate (Sibor) and swap offer rate (SOR) - key benchmarks used to price most home loans here - shot up after years of slumber.

Fitch Ratings said in January that in tandem with Singapore's benchmark rates, mortgage rate indices will also increase slightly this year, albeit still reaching low levels of around 2 per cent.

CIMB regional economist Song Seng Wun noted that the spikes in the SOR and Sibor were due mainly to a flight to safe haven assets denominated in the greenback as fears heightened over a potential exit by Greece from the eurozone.

Following a surprise policy move by Monetary Authority of Singapore last week to slow the appreciation of the Sing dollar, the three-month Sibor - most commonly used to set floating-rate home loans - continued its upswing, hitting a fresh five-year high of 0.679 per cent as at Monday.

"Unless another external shock triggers an economic slowdown, we are of the view that we are seeing the start of a new growth cycle, which means that interest rates will go up," Mr Song said.

But currently, lower oil prices and easing inflationary pressures suggest that the rise in interest rates will be not be brisk, he added. He expects the Sibor to rise above one per cent by the end of this year and 2 per cent by end-2016.

Chua Yang Liang, JLL head of research for South-east Asia and Singapore, noted that if interest rates continue to spike further, they will have a destabilising effect on the residential market. "Multiple homeowners will feel the pinch, especially with the slower economic growth and rising interest rates," he said.

With a softening leasing market, owners who have over-committed to high loan quantums or are holding multiple units may face further "cash crunch", Ms Ng said. Colliers estimates that some 78,402 units are expected to be completed by 2018, of which a significant 20,824 units are due to complete this year.

"If for a prolonged period, these property owners are not able to rent out their properties and service their mortgage loans, the market could see more mortgagee sales this year," she added. She expects the number of mortgagee sale listings to hit the 200 mark this year, up from close to 160 last year.

But for investors who can manage their cashflows, Ms Ng felt that they may be better off renting the property out at a lower rent to gain some income to service their monthly mortgage payments, rather than to let go of their units at lower prices.

As for owner-occupiers, Ms Ng felt that it is time to commit to their choice property - one that is in their preferred location and within their budget. A further slide in private home prices by another 5-8 per cent and a continued fall in luxury apartment prices by up to 10 per cent this year may provide a window for homebuyers to enter, she said.

-By Lynette Khoo

Low Keng Huat acquiring 20% stake in AXA Tower

Source: Business Times / Companies & Markets

Low Keng Huat (Singapore) Limited (LKHS) said that it is acquiring a 20 per cent stake in AXA Tower as part of the consortium led by Perennial Real Estate Holdings Limited (PREH) to acquire the property for an aggregate S$1.17 billion or S$1,735 per square foot (psf) of net lettable area (NLA).

-By Lynette Khoo

Cut second-home ABSD for citizens as market slides

Source: Straits Times / Opinion

THERE are growing calls from almost every quarter of the property market for the Government to remove some of its measures introduced since 2009 to cool the market.

Developers fret over unsold units while nervy buyers are cautious about catching a falling knife. Property agents are leaving the industry as transactions dry up, while home owners dread the prospect of tumbling property values.

To be sure, the fall in prices is not dramatic: for the whole of last year, private home prices eased 4 per cent and public housing prices fell 6 per cent.

The fall isn't even in the double digits. And as any number of government leaders have noted, prices are still up about 60 per cent compared to mid-2009. As Deputy Prime Minister Tharman Shanmugaratnam reiterated in October, there is still "some distance to go in achieving a meaningful correction, after the sharp run-up in prices in recent years".

But the time has come to at least reduce the pain.

The market is already falling gently. The slide could become hard to arrest, given the overhang of new and soon-to-be-completed private residential units. It's time for the Government to moderate the measures.

Just what would work? Mr Michael Lim, director of research at UBS, said a cut in additional buyer's stamp duty (ABSD) for Singaporeans buying their second homes would be viewed favourably by citizens. He suggested a cut of 1 to 2 percentage points.

Buyers of private residential properties now pay stamp duty of about 3 per cent for all home purchases. Singaporeans pay an additional 7 per cent for their second properties; and an additional 10 per cent for third and subsequent properties. Foreigners pay an additional 15 per cent stamp duty on all purchases.

Another set of cooling measures impose loan limits on buyers, subjecting them to lower loan-to-value (LTV) ratios.

A total debt servicing ratio (TDSR), introduced in June 2013, requires borrowers to keep all debts within 60 per cent of their gross monthly income. Not surprisingly, the slew of measures has indeed cooled the market.

Developers are dangling discounts for buyers, with Ms Yvonne Voon, an analyst at Credit Suisse, pointing out that "prime properties are seeing a sharper correction".

The 158-unit freehold development, The Vermont on Cairnhill, is a clear example. It sold out all remaining 37 units at a median price of $2,113 per sq ft - down from the previous median of $2,313 psf in July last year, which works out to a 9 per cent drop.

Mass-market homes, propped up by demand from Housing Board upgraders, have fared better. But even this previously resilient market could be losing its shine, as a record completion of public homes could "pose risks to prices" and siphon demand from mass-market condominiums, said Ms Voon.

In fact, the decline indicates that the market has changed fundamentally.

An era of cheap debt, brought on by quantitative easing after the global financial crisis, sparked exuberant investing and accelerated housing completions.

As a result, 21,359 more condo units will flood the market this year, with another 36,000 in the pipeline over the next two years.

The rising supply of homes comes at a time when the pool of tenants is declining with curbs on foreign labour growth. Property mania is thus making way for a new normal of rising vacancy rates and falling rental values.

Last year, rents fell 3 per cent - a reversal of four successive years of rising rents. Vacancy rates of private residences rose to 7.8 per cent as at Dec 31 - the highest since the fourth quarter of 2005.

A sobering number of forced-sale listings also signals that the market has started to tip.

"A heavy physical oversupply situation ahead, coupled with anticipated interest rate hikes from the Fed in the second half of 2015, will likely keep buyers on the back foot going forward," noted Mr Eli Lee, an analyst at OCBC Investment Research.

The confluence of factors adds up to a new state of play in the market. If a possible structural downturn looms, there are good reasons to ease some of the property curbs without threatening to overheat the market.

What measures might then be tweaked?

Doing away with the ABSD levied on foreign buyers would not be popular. It is, however, an arrow the Government could keep in its quiver should the market suddenly tank from unexpected external shocks to the economy.

Tweaking the ABSD that Singaporeans have to pay for their second homes can provide a small fillip to the market from cash-rich Singaporeans keen to invest in second properties in their own home town. Already, many are turning to property investments overseas to avoid the 10 per cent stamp duty (3+7 per cent) payable on second properties.

Buyers are bound by the loan curbs imposed under the TDSR and LTV limits. Thus investors would be in no danger of investing beyond their financial abilities, argued Rodyk & Davidson partner Lee Liat Yeang.

In other words, lowering the ABSD for second homes provides a gentle ballast for the market, makes it easier for citizens with means to own a second property - and will go some way to help absorb the whopping number of newly completed homes.

-By Cheryl Ong

Hyatt chain plans 'home away from home' hotel here

Source: Straits Times / Money

MORE than 40 years after Hyatt Hotels & Resorts opened its landmark Grand Hyatt Singapore in Scotts Road, the hotel chain is opening a second hotel here under its Andaz brand.

The firm believes the 340-room boutique hotel will offer a refreshing take on a lifestyle hotel in the up- and-coming Ophir-Rochor district.

Andaz Singapore is part of the DUO development, a landmark development expected to be completed by 2017 by developer M+S.

M+S was set up in 2011 as a joint venture between Malaysian investment fund Khazanah Nasional, which holds 60 per cent, and Temasek Holdings to build two integrated developments - Marina One in Marina South and DUO in the Ophir-Rochor area.

DUO was conceived by globally renowned architect Ole Scheeren and it will have 660 residences, 570,000 sq ft of Grade A office space and 56,000 sq ft of retail space, all set in a park-like environment.

This will be the first Andaz hotel in South-east Asia. Hyatt has 12 Andaz hotels in locations such as Tokyo, Shanghai and New York.

With Andaz Singapore, Hyatt aims to blend into the culturally vibrant Kampong Glam area.

Hyatt works to ensure that its Andaz hotels reflect the unique cultural scenes and spirit of the surrounding neighbourhood. Mr David Udell, group president of Hyatt Hotels and Resorts in the Asia-Pacific, said Andaz would feel "like a home" to guests.

For example, guests would be able to sample authentic local cuisines and dine anywhere within the hotel.

He said 44 years after Hyatt established the Grand Hyatt Singapore, it had carefully mulled over the move to build a second hotel here.

Mr Udell said Singapore was an attractive hub for both business and leisure. He expressed confidence that the Government's commitment to sustaining the vibrant tourism scene - such as the recent makeover of Scotts Road and the development of the two integrated resorts - would continue to boost the tourism industry.

He predicts growth in demand here for concept-style hotels such as Andaz "as long as Singapore remains innovative and creative in its offerings".

He is unfazed by the fact that the sharing economy, as exemplified by accommodation-sharing site Airbnb, is gaining traction, noting that they "appeal to different markets".

Andaz plans to sponsor cultural events with a community connection that allow "local artists to express themselves" and celebrate the hotel's locale.

-By Felicia Lee

Bid for Sengkang temple, columbarium 'open and transparent': Life Corporation

The parent company of Eternal Pure Land says it had provided all necessary information according to tender conditions. National Development Minister Khaw Boon Wan had said the site was not meant for a commercial columbarium.

Source: Channel News Asia / Singapore


SINGAPORE: The parent company of the firm whose bid to build a Chinese temple and columbarium in Sengkang sparked an outcry insists that its tender process was open and transparent.

“Life Corporation provided all information required and requested in accordance with the tender conditions,” the firm said in statement on the Australian Securities Exchange website on Monday (Feb 2).

The Australian company's statement comes after National Development Minister Khaw Boon Wan had said in Parliament last week that the site was not meant for a commercial columbarium. He also said authorities are discussing with winning bidder Eternal Pure Land to “ensure the land is restored to the original plan of a Chinese temple”.

The proposed columbarium at the temple had raised the ire of prospective residents who will move into housing developments nearby. As many as 3,300 households could be affected as the site is immediately surrounded by two BTO projects and one executive condominium. 

Life Corporation said it is "sensitive" to both public and Government feedback and is currently "exploring with the Government whether a mutually satisfactory and viable solution can be found in due course".

The company also acknowledged recent public sentiment that ownership of such a land development should be by a non-profit religious organisation. “It has always been its intention that the temple component of the development would be headed by religious individuals.” 

Life Corporation also pointed out that under the Urban Redevelopment Authority’s guidelines, columbarium use is allowed, provided it does not exceed 20 per cent of the total gross floor area of the development. It added that since the tender was awarded, it has made preliminary plans regarding the temple's operation upon its completion in 2017.

- CNA/dl

Companies' Brief



Keppel boosting in-house capabilities to groom leaders

CEO Loh Chin Hua plans to cast the net wide to build a strong succession pipeline within the group

Source: Business Times / Companies & Markets

KepLand appoints KPMG as independent financial adviser

Source: Business Times / Companies & Markets

Keppel Land on Monday said that it has appointed KPMG Corporate Finance Pte Ltd as the independent financial adviser (IFA) to advise its independent company directors on the offer by Keppel Corp. A circular containing the IFA's advice as well as the recommendation of the independent directors will be sent to shareholders and bondholders in due course.         

Guocoleisure Q2 profit up 8% at US$14.8m

Source: Business Times / Companies & Markets

Guocoleisure posted a net profit of US$14.8 million for the second quarter ended December 2014, up 8 per cent from US$13.7 million a year ago. The diversified investment's revenue over the period slipped 6.7 per cent to US$99.6 million over the quarter due to lower contribution from the gaming and property segments.

-By Anita Gabriel

Reits: Time to end tax breaks?

A slew of tax incentives 10 years ago fuelled the growth of Real Estate Investment Trusts or Reits in Singapore. It's time to retire some of them.

Source: Straits Times / Opinion

AS PEOPLE gear up for Budget 2015, one low-profile but important tax sweetener is being monitored quietly by investors and analysts.

This is the slew of tax incentives for the Singapore Reit market introduced in 2005, and renewed in 2010. They expire on March 31 this year, unless renewed in this Budget.

If the tax breaks are removed come April 1 in the new financial year, they could have an impact far beyond that on a few S-Reit funds and their direct investors.

For S-Reits, as they are called, are big owners of Singapore's shopping malls, commercial buildings and factories. How they adjust their way of doing business as a result of any tax changes may have an impact on business costs and that may, in turn, have a bearing on our costs of living.

Reits are "closed end" funds which invest in income-generating real estate assets. What makes them so alluring to investors is their tax-efficient structure.

If they pay out at least 90 per cent of their income as dividends, Reits are exempt from paying any income tax. Individual investors are also exempt from paying tax on the dividend they receive.

Tax incentives were launched 10 years ago to encourage the set-up of more S-Reits as well as to attract more foreign institutional and corporate investors to invest in the S-Reit market.

The incentives were given for five years initially, but they were extended in 2010 for a further five. In 2005 when the tax incentives were introduced, there were only five S-Reits with a total market value of about $9 billion.

Since then, the market has grown: there are now 28 Reits and six stapled securities - involving a Reit "stapled" to other forms of investment - with a total market capitalisation of $67 billion.

The market consensus is that the tax incentives will be renewed for another five years.

As DBS Vickers noted, competition posed by other countries in developing their own Reit markets makes a case for renewal. It said: "These tax incentives are key attractions which made Singapore one of the leading Reit hubs in the Asia-Pacific region. In addition, Singapore needs to stay ahead, given that India, Thailand and China have been fine-tuning and instituting their own Reit regulations to draw in capital investments."

However, a few analysts beg to differ. Nomura analyst Sai Min Chow said in a report that the renewal may not be a given, given the need to fund more social spending.

Others say the Government should not give a carte blanche extension on all the 2005 tax incentives offered to the S-Reit sector.

Ripe for removal

IF ANY incentives should go, the top one is the stamp duty concession given to Reits which has made it cheaper for them to acquire properties here.

Right now, stamp duty is waived for the purchase of properties by Reits IPO aspirants, or Reits already listed in Singapore.

This encourages companies owning properties to inject them into a Reit and spin it off as a separately listed firm without incurring the pain of paying a 3 per cent stamp duty to make the transfer on the properties.

Analysts say the stamp duty waiver also makes Reits more aggressive in acquiring properties here, as they take advantage of the tax incentive. Their gripe - rightly or wrongly - is that in order to make their purchases pay off, Reits then jack up rentals on the acquired properties. This, in turn, drives up the costs of doing business in Singapore.

So removing the stamp duty may dampen the appetite for S-Reits to tote up more property purchases here and, hopefully, soften the market for commercial buildings and malls, stopping rental appreciation.

Incentives that can stay

WHAT about other incentives that Reits enjoy?

Individual investors - local or foreign - do not pay any taxes on the dividends from their S-Reit investments. Corporate investors are taxed at their respective tax rates on Reit income, unless they enjoy an exemption.

However, to lure foreign non-individual investors to invest in S-Reits, the withdrawing tax on Reit dividends received by them was reduced to 10 per cent in 2005 for a period of five years and renewed in 2010 for another five years.

Mr Leonard Ong, a tax partner with audit firm KPMG, expresses concern that removing this tax incentive in the next Budget will likely see a lower net dividend payout for this class of investors and make S-Reits a lot less attractive to them. "This may cause some of them to exit their S-Reit investments and cause a significant drop in market value, if the exodus is en masse," he said.

The same argument applies on the tax exemption which S-Reits enjoy on the income which they earn on their foreign properties.

Such rental income is already subject to taxation in the country where the foreign property is located. When the income is remitted back to an S-Reit in Singapore, it does not suffer a second round of taxation, subject to certain conditions being met.

If this exemption is not extended, an S-Reit making fresh foreign property acquisitions after March 31 could potentially suffer double taxation on the same overseas rental income it earns.

But not all analysts think the same way. One corporate lawyer thinks over-reliance on S-Reits to spur investor interest in the stock market is unhealthy: "We have a lot of Reits already. It is time that the Government put our tax incentives to work in other areas to attract other asset classes to give greater depth to the SGX."

So whatever the Finance Minister announces on Feb 23, Budget Day, it would be wise for S-Reit investors not to assume that the status quo will remain. As the recent move by the Monetary Authority of Singapore to slow the appreciation of the Singdollar shows, policymakers can spring surprises.

-By Goh Eng Yeow, Senior Correspondent

Fortune Reit manager names chairman's daughter as CEO

Source: Business Times / Companies & Markets

The manager of Fortune Reit on Monday named Justina Chiu Yu, 34, as chief executive officer, as part of its succession planning, it said. Ms Chiu is currently the deputy CEO and executive director of the manager. The appointment is executive, as Ms Chiu will be responsible for the overall performance and direction of Fortune Reit.

-By Lee Meixian

Frasers Hospitality Trust

Source: Business Times / Companies & Markets

Frasers Hospitality Trust's maiden results for the period between July 14 and Dec 31, 2014, were in line with expectations. Distribution per unit of 2.97 Singapore cents (which includes as yet un-repatriated income from Japan), however, beat initial public offering forecasts by 5.3 per cent.

Global Economy & Global Real Estate


Fancy living in a 3D-printed apartment block?

Chinese firm unveils building as 3D printing gathers buzz in the country

Source: Straits Times / Asia

SHANGHAI - A Chinese engineering and design firm has unveiled what it is calling "the world's tallest 3D-printed building".

The five-storey residential apartment block made from recycled construction materials is currently on display at the Suzhou Industrial Park, alongside a 1,100 sq m 3D-printed mansion which costs an estimated US$160,000 (S$217,000).

The Shanghai-based company, WinSun Decoration Design Engineering, constructed the apartment block by using a giant printer measuring 6.6m tall and 10m wide.

Instead of ink, the printer squirts out a paste made from recycled waste material, glass fibre, steel, cement and hardening agents.

The printer works by printing layer by layer. Large sections of a building are printed out and then assembled together, much like prefabricated concrete.

WinSun chief executive Ma Yihe told the Associated Press that the printing process for the mansion took just one day per storey.

According to the company's website, its 3D-printed walls are about 50 per cent lighter than concrete walls, but have "much higher strength and toughness".

It also claims that the walls will not crack and that they have strong water-proofing as well as improved air permeability and heat retention compared with walls made from normal construction materials.

According to the chief engineer of China Construction Engineering Bureau, Mr Ma Rongquan, who inspected the buildings, both structures are in compliance with national standards, though he was quick to note that there were really no standards written yet for 3D-printed architecture.

WinSun gained international attention in April last year when it constructed 10 single-storey homes from 3D-printed materials in less than 24 hours, with each building costing less than US$5,000.

The company said that the mansion is the prototype for a set of 10 ordered by a Taiwanese real estate group, while the Egyptian government has ordered 20,000 3D-printed houses.

3D printing is increasingly gathering buzz among Chinese manufacturers.

Last October, the southern Chinese city of Changsha launched an industrial park, aimed at being China's first hub for 3D printing technology.

Following Changsha's lead, the cities of Wuhan and Zhuhai have announced similar 3D industrial hubs, with the support of local governments and universities.

Mr Luo Jun, executive president of the China 3D Printing Technology Industry Alliance, told China Daily that 3D printing technology has been growing rapidly in China, with more than 40 per cent growth for the last two years.

But he added that compared with the United States, Europe and Japan, China was still at an infant stage.

"We have much space to grow in many key technology areas, such as laser and materials. But we are getting closer and closer."

Asian investors to continue key role in hotel deals outside region: EY report

China was one of Asia's most active hotel buyers in 2014, followed by Japan and Singapore

Source: Business Times / Government & Economy

Hyundai Motor plans to build tallest skyscraper in South Korea

Source: Business Times / Real Estate

Kaisa CEO's departure dashes hopes of near-term rescue deal

Source: Business Times / Real Estate

Further rate cut could overheat Norway property

Source: Business Times / Real Estate

Diageo Puts Ryder Cup Host Site Gleneagles Hotel Up for Sale

Source: Bloomberg

(Bloomberg) -- Diageo Plc has put Scotland’s luxury Gleneagles hotel and golf-course complex on the market as the world’s biggest distiller seeks to capitalize on a booming property market and the success of last year’s Ryder Cup.

The maker of Tanqueray gin has had “numerous expressions of interest over the years and particularly since the Ryder Cup,” played at the venue in September, Diageo spokeswoman Rowan Pearman said in an e-mailed statement. “As you would expect, we have a duty to consider such interest carefully.”

Diageo hired real estate broker Jones Lang LaSalle Inc. to handle the sale of the property, which sprawls across 850 acres of central Scotland countryside and could fetch more than 200 million pounds ($301 million), according to The Times of London, which first reported the news Jan. 31.

Built by the former Caledonian Railway Company, the 232-room Gleneagles hotel opened its doors in 1924, five years after golfers began playing its King’s course. Diageo and its predecessor company, Guinness Plc, have owned the complex since 1984, and previously tried to sell it in 1998, only to back off after failing to get a high enough offer.

In 1921, Gleneagles hosted a match between golfers from Great Britain and the U.S., won 9-3 by the British. That contest evolved into today’s Ryder Cup, which pits the best European golfers against their American counterparts. Last year’s Ryder Cup was the first to be played at Gleneagles.

The Scottish complex received a multi-million-pound refurbishment before the 2014 tournament, which Europe won for the third straight time with the biggest margin since 2008. For non-professionals, one round at Gleneagles can cost as much as 230 pounds. The Edwardian-style ballroom at the hotel can accommodate 300 guests.

Diageo is not the only drinks company looking to divest assets to focus on its core products. Last year, SABMiller Plc, the world’s second-biggest brewer, sold a $1.09 billion stake in South African hotel and casino operator Tsogo Sun Holdings Ltd.

-By Matthew Boyle

AvalonBay Pays $300 Million for Site for Manhattan Tower

Source: Bloomberg 

(Bloomberg) -- AvalonBay Communities Inc. bought the American Bible Society’s headquarters on Manhattan’s Upper West Side, with plans to build a residential tower in a booming area for development.

The real estate investment trust paid $300 million for the property at 1865 Broadway, on the northwest corner of 61st Street, according to a statement Monday. The American Bible Society, which is moving to Philadelphia, will continue to occupy its office space at the site through the third quarter.

AvalonBay, the biggest publicly traded U.S. apartment landlord after Equity Residential, plans to develop a complex of more than 300,000 square feet (28,000 square meters), including a retail component at its base. Construction at the site, two blocks from Columbus Circle, is slated to begin in late 2016.

About 2,590 newly built rental units will come to market in Manhattan’s West 50s and West 60s neighborhoods through 2016, according to data compiled by New York brokerage Citi Habitats. The pipeline of projects may mean rents in the midtown west area will be “a little bit soft” compared with other Manhattan submarkets, Sean Breslin, AvalonBay’s chief operating officer, said last week on the company’s earnings conference call.

Equity Residential is completing a 20-story tower at Amsterdam Avenue and West 68th Street, which will begin leasing in April, according to the company’s website. The Durst Organization is building a pyramid-shaped rental building at 57th Street between 11th and 12th avenues. Leasing of the 709 units is scheduled to start early next year.

Biggest Project

Farther south in the West 40s, 1,810 new rentals will be added through next year, including Moinian Group’s 605 W. 42nd St., the largest project in Manhattan, with 939 market-rate apartments, Citi Habitats said.

Manhattan’s apartment market has rebounded to almost peak levels, even as newer towers in Brooklyn and Queens lure renters to outer boroughs. The median Manhattan rent rose 4.8 percent in December from a year earlier to $3,250, according to Douglas Elliman Real Estate and Miller Samuel Inc.

AvalonBay shares fell 0.2 percent to $172.65. They have gained 40 percent in the past year.

The company, based in Arlington, Virginia, owns or holds an ownership stake in 277 apartment communities in 11 states and Washington, D.C. A fire last month destroyed much of the AvalonBay’s property in Edgewater, New Jersey, near the Hudson waterfront.

-By Sarah Mulholland & Oshrat Carmiel

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